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Gold prices rose in Asian trading on Wednesday, recovering part of the sharp losses from the previous session as investors reassessed safe-haven demand amid the escalating U.S.–Iran conflict and a powerful rally in the U.S. dollar.
Spot gold climbed 1.2% to $5,150.63 per ounce by 01:45 ET (06:45 GMT), while U.S. gold futures gained 0.8% to $5,166.40.
The rebound followed a steep 4.5% drop on Tuesday, when a surge in the dollar and rising U.S. Treasury yields pressured the precious metal.
Strong dollar caps gold’s upside
The U.S. Dollar Index traded largely flat on Wednesday after jumping nearly 1.5% over the previous two sessions, reaching its highest level in six weeks.
The greenback was supported by safe-haven inflows and fading expectations that the Federal Reserve will cut interest rates soon.
A stronger dollar typically weighs on gold, as it makes the metal more expensive for buyers using other currencies, limiting international demand.
Middle East tensions keep safe-haven demand alive
Despite the headwind from the dollar, ongoing geopolitical tensions in the Middle East continued to support bullion.
The confrontation between the United States and Iran has intensified following coordinated U.S. strikes on Iranian-linked targets, prompting retaliatory threats from Tehran and raising fears of a wider regional conflict.
Investors are increasingly concerned that the standoff could disrupt global energy flows and potentially draw additional regional powers into the conflict, increasing geopolitical uncertainty.
Rising oil prices complicate policy outlook
Oil prices remained elevated on fears of supply disruptions, particularly around key shipping routes in the Persian Gulf.
The surge in crude prices is adding to inflation concerns, which could complicate the outlook for global central banks, including the Federal Reserve.
Higher inflation expectations tend to support gold as an inflation hedge, but they can also push bond yields higher — a factor that may limit the metal’s near-term upside.
With geopolitical tensions high and monetary policy expectations shifting, gold is likely to remain volatile as markets balance safe-haven demand against the strength of the U.S. dollar and rising yields.
